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Lady Tweetmouth @RookieKE
, 32 tweets, 12 min read Read on Twitter
Are you a small business owner? Are you strategizing on how to convert your side hustle into your main hustle? Then don't step out for lunch, today's #52WeekChallenge Twitter chat is for you!
Just like last time, we will have @ushuru_co_ke at hand to answer all the difficult business tax questions (small businesses focus). Please tune in then, and you can send in questions in advance.
Sorry guys. The chat is TODAY (the 26th). Small mistake on the previous tweet
Good afternoon! Have you filed your taxes? #FileWithUshuru
Anyway. This is tax week and we are having our second of 4 chats where I am sharing tax information and hosting @ushuru_co_ke who are teaching us how to be smart about taxes.
Today, the focus is on small business folk. Last time, we spoke about individual taxes for folks on a salary, check the chat out over here---->
In this chat, I'll share about 7 general tips for setting up your taxes properly when starting out in business, then we will answer all the questions. #FileWithUshuru
1. When starting, you have the choice of going with a business name, or a limited liability company. This means 2 different things tax wise:
- A business name is like an extension of yourself. It is just a simple way to formalize your trade. You don't need to register the business with iTax, and you file its income under "business income" in your personal tax returns. #FileWithUshuru
- A limited liability company is an independent entity. You need a PIN (and of cuorse an iTax registration for it), and its returns must be filed separately from your individual returns #FileWithUshuru
As to which form is better for you legally, maybe I'll have a volunteer lawyer to come on a different Twitter chat so we can discuss this. But for now, lets talk taxes cos we only have 4 days to go #FileWithUshuru
2. Let's talk about the iTax registration. There is only ONE mandatory tax all businesses should register for. Income tax (corporate tax), which is charged at 30% on profits made. #FileWithUshuru
Do NOT tick VAT on the iTax registration if you do not plan to make at least KES 5 million per year in taxable sales. This is a mistake many businesses make,and it can be costly. #FileWithUshuru
If you have, please file a deregistration application, and make sure you file VAT returns every month, even if its NIL. Failure to do so attracts a monthly fine of KES 10,000 whether the company is dormant or not #FileWithUshuru
There are instances where a business making less than KES 5 million in taxable sales may choose to register for VAT, and @ushuru_co_ke can tell us more about this, but don't register inadvertently #FileWithUshuru
3. If you have employees, you are obliged to deduct PAYE (and other statutory deductions like NHIF, NSSF) and remit these to the tax man, and then update that on your iTax #FileWithUshuru
4. Let's talk about records. This is where many small businesses get caught out. The law requires you to keep your tax records for 5 years. This is because should they need to do an audit, they will want to see these #FileWithUshuru
The records you should keep are your financial statements (income statement, balance sheet, cashflow statement), trial balance, signed accounts, and all supporting documentation (LPOs, agreements, receipts etc) #FileWithUshuru
It's wise to scan and upload the key ones onto the cloud. Also note, if you want to claim VAT, you must have ETR receipts for all purchases made #FileWithUshuru
5. If you are a director of a company, you have an obligation to ensure that the company is tax compliant. Failure to do so means KRA could come for your personal assets to settle tax arrears #FileWithUshuru
KRA hapana tambua mambo ya "limited liability", when it comes to collecting what is due to them. PLEASE don't sign up to be a director in random companies because friends and family ask you to. #FileWithUshuru
6. Review your business agreements to ensure that everyone you deal with is doing their bit tax wise. If they have deducted withholding tax, follow up if you don't receive an iTax notification of their payment #FileWithUshuru
Why? Because withholding tax is a prepayment of your corporate tax, if they don't remit, you haven't paid it. And maybe @ushuru_co_ke we need a chat to discuss the different taxes after the tax week pressure is off. #FileWithUshuru
Whenever you are engaging a foreign consultant, e.g. from the US, Uganda, UK etc, be aware of a gross-up provision that requires you to pay the consultant’s withholding tax in Kenya on their behalf. So the cost will be higher #FileWithUshuru
7. Your iTax profile is your responsibility. If you have an accountant who does your filings, link your iTax profile to your email address so that you can receive notifications whenever filings are done #FileWithUshuru
Make sure PAYE is filed by the 9th, Withholding tax and VAT by the 20th. Please save these dates on your company calendar, because missing a return will cost you bigly #FileWithUshuru
This is very important. The Company's Act allows sole directorships, so don't get roped in. Where you had signed up, resign and make sure the records are updated.
Please confirm that your business isn't inadvertently registered for VAT. This is a whole #52WeekChallenge 100 bob version's savings gone to the tax man if you do not rectify
I've shared the 7, please ask any questions you may have. Also tag @ushuru_co_ke as they're the experts in the house
Those who answered no here. What are you waiting for? Do you find the system overload that always happens exciting?😂😂😂😂
Anyway. Hand that stress over to @ushuru_co_ke , their charges are lower than a good bottle of wine 😄😄😄
One question @ushuru_co_ke what should one do if a business was registered (Even for VAT), it never traded and the person wants to dissolve it? #FileWithUshuru
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